Nvidia: Intel Should Build Our Chips In Its Factories

Nvidia Chief Executive Jen-Hsun Huang is nothing if not bold. He drives a red Ferrari. He wears a leather jacket. And just ask him sometime about the fried chicken business...

Huang’s latest suggestion: rather than trying to keep up, Intel should put its cutting-edge semiconductor factories to work building chips from companies such as Nvidia, Qualcomm, Apple, and Texas Instruments .

“Why not be a foundry for all the mobile companies?” Huang told a group of reporters Wednesday evening. “There’s no shame in that.”

Intel’s response: thanks but no thanks.

“We have a small nascent foundry business, but our focus with our SOCs (systems on a chip) is really on Intel based platforms,” said Intel spokesman Jon Carvill. “Our process technology is a huge advantage going forward in 2012 and 2013, so our focus at this time is on building Intel products, not on building products for our competitors.”

Huang’s remarks come as Intel is preparing an all out assault on the smartphone processor business. Last year, smartphone sales surpassed personal computer sales for the first time -- and Intel needs all the volume it can get to keep its factories at the cutting edge.

That move edges Intel towards territory long-dominated by chip foundries such as TSMC and Globalfoundries.

Companies building mobile processors based on ARM’s designs at such foundries are getting close to the point where they can do serious damage to Intel, Huang argues.

Microsoft's latest operating system, Windows 8, which arrives later this year, will run on tablets built around Nvidia’s mobile processors as well as chips from Intel and Advanced Micro devices, Huang pointed out.

The problem, for Intel, is that Nvidia’s Tegra 3 mobile processors are cheap. Meanwhile, Intel has an enormous manufacturing infrastructure to maintain.